View on competitive performance
Category : Competitiveness Essays
Abbott Laboratories Ltd. Are has the market value of being among the 50 companies in the United States and has been recognized around the world with expansions covering almost the 7 continents and distributes to 130 countries worldwide. In retrospection, Abbott was founded by Dr. Abbott, considered one of the founders of modern pharmacy, because of his invention of the dosimetric granules through the use of an alkaloid. Following the first few years of success in the business, Dr. Abbott shifted and extends his research focus to synthetic medicines courtesy of Dr. as the one who gets to convince Dr. Abbott to venture into the promising new field of growth. In 1915, from Abbott Alkaloidal Company the emergence of what is now known as the Abbott Laboratories.
With the reach heritage being in the business for more than a century, the men and women behind Abbott have been constantly driven to a common goal, the advancement of medical science to be able to help people in enriching healthier lives. Abbott Laboratories Ltd. is a health care company with bases across the globe which aims to discover new medicines, develop new technologies and alternatives to managed health. Abbott products extend from being that of care to nutritional products and innovative laboratory diagnostics. Further, Abbott’s sweeping products goes from catering health needs of infants up until to the golden years. Indeed, the products of Abbott foster holistic approach towards giving people a healthy living. For the fiscal year 2005, Abbott’s sales amounted to $22.3 billion in which $1.8 billion has been allocated to the research and development which plays a pivotal role in the continuing success of Abbott.
Overview of Theories
- Core Competence: (1990)
The journal of (1990) is descriptive of the development and maintaining core competence in a company. It explores the different leading companies core competences and describes how these big time companies gets to engulf core competence in the business world. It is said that in the short-run, the competitiveness of a company stems from the attributes on price/performance of current products while in the long-run, the core competence is spawned from coming up with innovative unlikely products stemming from the building ability power at lower costs that is more hasten than that of the competitors. There are four varying definition of core competence. First, denotes to the collective learning in the organization. Second, competence spells involvement and deep communication to working across the borders of the organization. Third, competence is not diminishing in use wherein it is sort of like glue that binds the existing businesses. Finally, there are three named test to gauge core competence in a company. They are the provision of potential accessibility to a wide array of markets, the impeccable contribution to the perceived customers’ benefits of end products and the distinction which is barely susceptible to imitation.
- Resourced-based View: (1998)
Two themes about marketing strategy in the 1990’s dominates, among the two is the resource-based view (RBV) of the firm. The RBV seeks to expound on the firms sustainability of competitive advantage which are drawn from RBV’s two main approaches. First, is the resource-based approach that emphasized on the rent earning capability of internal scarce resources (1993). Second, is the dynamic capabilities approach that looks into how resources and capabilities are being developed in the context of the firm which in turn, stresses the need for external market orientation to achieve competitive success. The contention of resource-based theorists suggests that for strategy to be sustainable it has the apparent need to be etched in the resources and capabilities of the firm.
In this journal, it discusses two fundamental approaches in the creation of advantage over competitor (1980, 1985) through cost leadership and differentiation. Cost leadership evokes firms to seek similar attractive offerings to the market without necessarily lowering internal cost while in differentiation, it tries to make the offerings distinctive and diverse in the market-place such that the distinctiveness would provide add-on value to customers and (Hunt and Morgan 1993) persuades customers to buy brought about by the modifications in the offering.
In lieu to the quest in gaining competitive advantage, the positioning of the firm in the marketplace is vital. There are seven named positioning in which firms must consider and constantly work on to find themselves having the best positioning as possible. First, the competitive positioning pertains to the firms’ choice of occupancy that in line with the combination of a chosen target and the differential advantage it seeks to create. Additionally, (1996) suggested three main ways in competitive positioning. One is the variety positioning which is simply product centered. Two is the needs-based positioning wherein its occurrence is dependent on the firm identification of target market and then draw an offering design to come to terms with the product-related needs. Three, access-based positioning that is from the identification of segments via commonality in terms of accessibility. Second, the price positioning, particularly the offering of low-price positioning wherein, it requires keeping close eyes to the incurring of costs. To benefit from price positioning, firms should have a lucid price-sensitive sector of the market and the cost advantage to cater to the market. Third is the quality positioning and has been followed by innovation positioning, service positioning, benefit positioning and the tailored positioning accordingly.
- Capabilities Approach to Market-driven Organizations: (1994)
The journal of (1994) tackles the capabilities approach to strategy that characterizes market driven organizations. As defined by (1994), capabilities are complex bundles of skills and collective learning, exercised through organizational processes that ensure superior coordination of functional activities. It is noted that companies that are better equipped to initiate responsiveness to pertinent market requirements and sense of anticipating ability to the altering conditions are likely to indulge long-run competitive advantage and superior profitability. Market orientation represents superior skills in understanding and satisfying customers ( 1990). The principal features are a set of beliefs that puts the customer’s interest first (1993), the ability of the organization to generate, disseminate, and use superior information about customers and competitors ( 1992) and the coordinated applications of inter-functional resources to the creations of superior customer value (1990; 1988). Moreover, the supporting propositions that a market orientations is positively associated with superior performance ((1993;1992; 1990; 1992)
The emerging capabilities approach otherwise called as the resourced-based theories, in terms of strategy, offers a new perspective in market orientation where in seeks to identify the sources of defensible competitive positions distinctively such that it would be resistant to imitation. Further, the approach cites two related advantages: assets and the capabilities. To contrast both advantages, according to (1989), capabilities differ from assets such that it cannot be quantify by monetary value and are so deeply embedded in the organization routines and practices that is not susceptible to imitation or interchangeable. Additionally, when emerging capabilities approach teamed up with total quality management (TQM), it would offer a wide-array of ways to design/redesign programs that enhances market orientation.
The competitive forces approach (1980) and the related entry deterrence approach (1990), which have been the dominant paradigms in the strategy field ((1991), have a different answer as to how superior performance can be achieved. These approaches put the emphasis on the intensity of competition in the industry and market segment that determines the profit potential. The firm seeks a position in an attractive market that it can defend against competitors.
In contrast, the capabilities approach serves as a locator of the sources of defensible competitive position in the distinctive, hard-to-duplicate resources that encompasses the integrations of assets and capabilities the firm has gradually developed (987; 1991). Thus, management’s task is to determine how best to improve and exploit these firm-specific resources (1992), although in times of turbulence the challenge of developing new capabilities comes to the fore (1991; 1984)
An emphasis on building distinctive capabilities or competencies can be found in (1957) and Penrose (1959) and is featured in the strengths and weaknesses component of the early business policy frameworks (1969). Distinctive capabilities refer to upholding a market position that is invaluable and unmatchable and in which consistently sets a superior performance. Moreover, distinctive capabilities are robust and can be used in different ways to speed the firm’s adoption to environmental change ( 1991; 1990). Further, there are two subparts of distinctive qualities that are equivalently important in bringing in external realities to the attention of an organization. The market sensing capability evaluates the capability of organization in determining continuously sense changes in the marketplace and the pre-emptive anticipation of appropriate responses to marketing actions wherein the process of market sensing follows the usual sequence of information processing activities that organizations use to learn ( 1994; 1985; 1991; 1988; 1994). Customer-liking capability, on the other hand, comprises the skills, abilities and processes evident in the achievement of collaborative customer relationship wherein, for successful collaboration to occur it necessitates a high level of purposeful cooperation aimed at maintaining a trading relationship over time (1988;988).
- Resource Advantage Theory: (1996)
R-A theory proposes that firms’ quest for superiority in the financial performance in spite of the fact that all firms cannot be superior simultaneously, thus, in R-A competition it necessitates dynamism. There are five assumptions in R-A theory namely: (1) superior/inferior performance results from occupying marketplace positions of competitive advantage/disadvantage which results from comparative advantage/disadvantage in the resources. By resources, it refers to the tangible and intangible entities that are available to firms that permit firms to efficiently or effectively produce market offerings that have a value for market segments, (2) innovation plays a key role in R-A theory, whether proactive or reactive innovation, such that it have recognition on the entrepreneurial skills of the people and entrepreneurial capabilities of firms wherein it expresses clearly the competitive processes which may in turn led to economic change, (3) R-A theory reveals that despite of the absence of entrepreneurial firms that engages in proactive innovation, competition dynamism would still ensure the market-based economic systems, (4) R-A theory not only incorporates the higher-order learning ( 1996), it explicitly shows the competition processes motivates both the proactive and reactive innovation and as to how the firms learn from the competition process itself and (5) the theory highlighted managerial implications and so as the important public policy issues relative to market-based economies. Overall, R-A is perceived to five views, competition as an evolutionary process, the technology as a non-rival and in part an exclusive resource in the process of production, innovation as an outcome of competition processes, firms engulfing a rational expectation that superiority in financial performance is due to innovations and that societal institutions either facilitates or inhibits induced competition growth.
The Abbott Laboratories Ltd.
As Abbott Laboratories emerges, it had entered the period of growth that is characterized by war (the World War II), strategic acquisitions and the quest for scientific pursuits since companies at that time was also establishing themselves in the business just like Abbott.
From the (1990) identification of core competence, Abbott Laboratories is indicative of the three measures that falls into the context of core competence. First is the offering of wide array of markets. In Abbott, they extremely have the competence in pharmaceuticals and the advancement of medical science as having have had extended their products from the continuum of care being that of medicines, from producing nutritional products, like Ensure, and technology driven laboratory diagnostics that offers state-of-the-art medical devices and pharmaceutical therapies. Moreover, Abbott is considered to be the global leader in vitro diagnostics from which it evolved from immunodiagnostics as their cornerstone. Second, the contribution to the perceived customer benefits of the end products that is reflective of Abbott strong commitment to the advancement of science that focuses in the areas of unmet medical needs such as the fields of laboratory and molecular diagnostics that seeks for early detection for related medical conditions so that cure can be given and prevention can incur. And lastly, it is the competence of Abbot’s R&D organization that is works collaboratively together at high efficiency that is difficult to imitate. Guided by the Abbott’s mission, the Global Pharmaceutical Research and Development (GPRD) organization, works together collaboratively in constantly discovering, developing innovative medicines to be marketed and aimed to improve the unmet scientific needs and cure the ill-health of patients, as Abbott centers caring as the foci of their work.
Abbott Laboratories would not be competitive if it has not placed itself in the right position in the market. The competitive positioning, including the variety, needs-based positioning and access-based positioning, all together greatly fits in to the diverse characteristics of the people with different medical needs such that these people would be inclined to spend money for the promotion of good health and the urge of staying healthy as much as possible. The market of Abbott is extremely very rich since it is essentially all the people from every walks of life and from all borders across the globe needs to have a dose of pharmaceutical products to combat illnesses, diseases, or just plainly foster good healthy living. Further, the innovative positioning of Abbott is where they stay almost unbeatable. Across time, they have been the leaders in pharmaceutical business and Abbott continually excels in coming up with innovative inventions. Abbott’s innovations in medical products are seen from the diversified products, businesses and therapeutic areas they have been offering such that respected Abbott scientists shares Abbott’s dedication towards the common goal of the advancement of science to be able to provide healthier lives to the people. Every Abbott scientist unquestionably and fervently seeks out new innovative ways to come up with clinical solutions to come to terms with patients need. For example, in the case of finding the cure for the HIV, Abbott may have not come up yet with the proven cure for HIV but Abbott’s focus to this area is constantly gradually improving as currently they are able to produce new and improved HIV medicines that minimize the tendency for the immune system to be severe. Not only they are able to produce it, the product availability of the HIV medicines are being distributed to government, health care institutions and organizations worldwide via Abbott Access program, especially to the developing countries that are less able to afford these medicines.
The interesting challenging feature of capabilities approach by (1994) is the building of distinctive capabilities of the firm. Marriot for instance, for many years now they have been constantly chosen and preferred by customers as being the number one hotel in the world in giving customer satisfaction. What accounts for Marriot’s reputation is that they constantly seek to satisfy their costumers with the superb services and other intangibles they incorporate to their service offerings. Abbott did just that, like that of a Marriott, but of course, certainly in a different way. In this instance, we would illustrate the workforce excellence of Abbott that is presumably to be one of intangible asset Abbott has. With about 65,000 people employed, Abbott has earned the recognition as an employer of choice from local, national and international level as they provide employees with a workable environment to help Abbott people succeed with their endeavors with the inclusion of programs for the employees that ranges from health care benefits, convenience and wellness services and long-term retirement package. The passion for turning science into caring proves to be an endearing commitment that place emphasis on the value for life. Abbott’s “Promise for Life” statement signifies what Abbott in general believes in, the value that they hold and thrive to deliver quality work outputs every for Abbott’s stakeholders. Thus, is in itself is indeed distinctive of Abbott, a promise that goes beyond mere accumulation of profit, but that is of putting importance to save and improve lives for everybody. Nevertheless, Abbott falls into the context being that of a market-driven firm because of Abbott’s ability to have the market sense capabilities a step ahead from their competitors and have the anticipating ability to be responsive in the attraction and retaining customers.
From the R-A theory perspective, Abbott stays to be in a competitive form as it seeks to be superior in the financial performance through their inventions of innovative products and sees the evolutionary process of competition as always competitive such that they continually seek for the advancement of science in their own way to come to terms with it. In 1980’s marks the expansion of specialization and expertise for Abbott in which they divested other products to be able to concentrate on their strong point of excelling in the quality of health care products in every stages of life. To name several Abbott’s areas of expertise they are in anesthesia, animal health, anti-infectives, cardiovascular, diabetes care, hematology, clinical chemistry, immunology, metabolics, neuroscience, molecular, nutrition, oncology, pain care, renal care, spine and virology. Overall, they contribute to the financial superiority of Abbott because the areas of expertise covers a wide-ranging capabilities, from top to bottom of the human anatomy and the identification of the valuable areas that needs medical attention. Abbott is able to utilize and explored, especially the unmet medical areas which cues Abbott to produce products innovatively to the market according to these needs. Nonetheless, aside from the established strategic positioning of Abbott in the marketplace, it is from these unmet areas Abbott can gain an advantage and such that they can generate financial assets in pursuance of being superior in the financial performance.
Conclusion and Improvement Recommendation
This essay had explored on the four different views of how to be able to gain and benefit from the acquisition of competitive advantage. From the different views of the authors namely, (1990), (1998), (1994) and (1996), it has been seen that the Abbott Laboratories Ltd. has incorporated the different means to have that competitive advantage, which in turn, benefited the Abbott of staying top in the pharmaceutical business for many years and in the future. Moreover, Abbott deeply understands the nature as to how dynamic competition can be and the market world in general. A pioneer and master in innovation by being a proactive innovator rather than a reactive innovator.
It is seemingly hard to recommend improvements for Abbott as it has proven itself to the world. As far as competitiveness is concerned, undoubtedly Abbott is able to come to terms with that and possess promising capabilities for the sustenance and maintenance in the future. Perhaps if required to give recommendation, it would be to a bit minimize in the expenditure for the R&D organization even though it is understandable that the Abbott relied on efficiency and effectiveness of Abbott’s R&D so that they would be able to invest some of the money to some organizations in Abbott that needs improvement or support, which in turn, they can benefit from, provided that it leads to the maximization of the other resources. The overly focus on one aspect may limit the effective functioning of the other aspect and brings in to the imbalance of the equilibrium of the firm or corporation.
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